Innovation-driven growth is no longer the prerogative of rich countries. Instead, innovation is now
firmly on the development agenda of many developing countries.
Yet, innovation policies and the required measurement frameworks and outcomes will need to be
adapted to the needs of poorer countries. One specificity of developing countries is indeed the ubiquity
of the informal economy (IE) in terms of economic growth and employment. Beyond its economic
importance, the IE also has a vital social component. Furthermore, in developing countries the IE is
often shown to be a greater source of innovation than the formal sector. Small or larger family entities
or enterprises that constitute the IE produce new products or processes under conditions of scarcity in
very diverse sectors. It is often driven by adopting, adapting and improving available ideas to solve
problems in light of available materials and limited disposable incomes.
However, too little is known about the innovation systems of the IE. Most evidence relies on anecdotal
studies rather than systematic research based on solid analytical frameworks and indicators. As part
of a wider research project on innovation in the informal economy, this paper proposes a
measurement agenda to capture informal or developing country innovation, its drivers and related
barriers.
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It is a follow-up activity to the work presented at the 6th Meide conference.
The paper is structured in three parts: The first part discusses innovation measurement approaches
applied to the formal sector, what can be learned from them, and whether its definitions and methods
could be transposed to the informal sector. The second part reviews measurement efforts targeted at
the informal sector so far. It also explores the integration of above structured measurement efforts of
the formal sector within those targeted at the informal sector. Methodological considerations as they
relate to sampling and general survey deployment are raised. Finally, the last part, the possibility to
conduct semi-structured interviews and more ad hoc surveys in the informal sectors or clusters of
specific countries is assessed and evaluated. The suggestions in this paper are intended to lay
important groundwork for future empirical work, for the development of appropriate indicators and to
support new approaches to innovation policy in developing countries.